Budget to cost £2,500 per employee

New analysis has revealed that the employment tax measures announced in the autumn Budget will increase the cost of employing a full-time pub and bar staff member by at least £2,500.

This new breakdown of costs, detailed by trade body UKHospitality, is based on a typical staff member, aged 21 or older, earning the National Living Wage and working 38 hours per week.

With that taken into account, an employers’ National Insurance Contribution will rise 53.9%, from £1,863 to £2,869. 

UKHospitality goes on to say that a single parent working 9am to 3pm, five days a week will cost £2,100 more in employment cost, while a student working 14 hours at the weekend will be £1,140.

The Institute for Fiscal Studies has said that businesses employing people on the National Living Wage will face the biggest hit from the increase. 

Not sustainable

"The increase to employer NICs and, crucially, the lowering of the threshold left hospitality owners with a sleepless night as they came to terms with the enormous cost they will have to bear from April onwards," says Kate Nicholls, CEO of UKHospitality. "The new cost of employing core members of staff is eyewatering – an increase of at least £2,500 is far, far beyond what anyone’s worst case scenario was. 

"The overwhelming feedback from the sector is that this is just not sustainable and will ultimately do real harm to our ability to support employment. 

"Hospitality venues will now have to ditch their ambitions to employ more people and do the very opposite – cut hours, scale back recruitment and, in extreme circumstances, let people go, because they simply can’t afford the scale of these costs.

"We understand the challenging state of the public finances, but balancing the books disproportionately at the expense of high street businesses will ultimately have negative consequences for growth, investment, employment and our communities."

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